Furthermore, I decided to open a retirement account. I am twenty—only a long string of part-time jobs dangles behind me—but I was convinced to get started by LearnVest’s explanation of compounding investing. At first, I admit, I felt no urgency to pay into what felt like the Fund of No Return, especially when I wasn’t exactly raking in dough on a day-to-day basis. Then, however, I saw that by doing a tiny bit now, I could haul in a vast return in the future (relatively vast, at least). With the money it would take to buy two shirts and a movie ticket, I could open an account that would serve me for years. I also had a very clear vision of my future-self aggressively kicking current-me if I were to put this off, and off and off, until my thirties or even forties.
Choosing My Retirement Account
The first thing I decided was to go the way of the Roth account. I have a part-time retail job that leaves me in the Roth income bracket with room to spare, and I’m someone who would personally rather pay now than pay later. I also knew that I was working with a significantly low initial deposit and that I didn’t want to pay any unnecessary transaction fees since I’d only be ponying up for investments in small increments. Unfortunately, I knew just about nothing else.
Here’s where LearnVest came into play. I enlisted the help of Lauren Lyons Cole, LearnVest’s most gracious resident CFP®. She confirmed that what I wanted to do was possible and what was more, reasonable, which actually came as a big relief since everyone outside of LearnVest was surprised by my pursuing this at my age. Lauren sat down and reviewed LearnVest’s retirement material with me. Of the recommended accounts, I decided to go with TD Ameritrade because it matched my criteria and minimalist needs. Lauren sat with me through the registration process (easy!) and the cross-registration with savings account (also easy!), which was confirmed within only a few days. I personally found it a great comfort to have someone there, for double-checking purposes as well as accuracy, especially as I knew I was an unconventional retirement account client.
Where To Invest?
Now that I had a TD Ameritrade account, I had to find something to invest in. While Ameritrade presented me with a wide, wide variety of options, I found their website complex and confusing to navigate. To say I was lost was an understatement. The information from LearnVest provided great guidelines for choosing my investments, but having Lauren next to me to pinpoint critical figures on the page was important. She showed me what to look for, so I used some of the sites tools to see my investing options for my money.
Ameritrade doesn’t list every crucial piece of information all the time, although their support staff is very helpful when called upon by phone or live chat. A “for instance” is that I tried to invest in a fund that denied me for no explicit reason, so I made a phone call, and the representative went step-by-step through the process with me. He was also flummoxed, but when he checked in with the mutual fund team, he found that the fund was only for 401(k)s and other employer-related accounts—not for my Roth—and that this information was available only in one version of Ameritrade listing found by doing a particular search. Hardly my fault I didn’t find it, I may say.
A few more bumps later—I was searching for a 50+ Target Date Fund but it seemed my low balance IRA would bar me from everything—I admit it: I canned the search and called Lauren back in. She did some research through the different funds, and it turns out that good funds with high Morningstar ratings are few and far between if you’re looking in a low minimum investment bracket for a Roth investor. TD Ameritrade, then, had been slightly misleading in saying that no minimum balance was needed when minimum investments were very nearly required to be at the $1000 mark.
Finally, we came to two conclusions. Since I was still resolute about starting this investment and sticking to it while in LearnVest’s extra helping hands, I opted to select between the two funds and put my money into one. Lauren warned me of the pluses and minuses to the two choices I had before me (blend, performance, rating, domestic versus foreign investments, etc.) and that while either these investments would be satisfactory, neither was an ideal basket for all of my eggs. Due to the minimums, though, I didn’t have any other options besides (a) adding several hundred dollars to the account, a big “no,” (b) letting my money sit in the money market until I built up enough to invest in something else, or (c) trying to cancel my Ameritrade account with no fees.
So I invested. Despite the unforeseen search and fund availability troubles, a wave of relief and excitement rolled over me when I bought into my fund. I am savvier than before. I am an adult! I am ready to retire, almost. I will say that had I know all that would be involved, I might have waited until I had a bit more money to work with. I intend to save up so that in two or three years from now, I can bite into a meatier investment that more matches my risk tolerance, etc. That said, I really just wanted to get my feet wet, not build a whole portfolio, so my investment suits me. Thanks a whole whopping heap to Lauren and LearnVest for their help, and for financial newcomers, have hope: There’s something out there to start you off if you’re educated about your options.
Follow Kaitlin on Twitter! @Kaitlin_MB